OBG talks to Cristino L Naguiat Jr, Chairman and CEO, Philippine Amusement & Gaming Corporation (PAGCOR), and Stephen Reilly, COO, Resorts World Manila

Interview: Cristino L Naguiat Jr and Stephen Reilly

To what extent will Entertainment City and the expansion of leisure infrastructure enhance Manila’s status as a regional destination?

CRISTINO L NAGUIAT: Entertainment City looks set to transform the face of tourism in the Philippines. While initial plans anticipated the project’s completion by 2018, all four operators will not stop improvements to their projects after this date, having already invested more than $1bn above the figure stipulated in their contract. Although most tourists have tended to overlook Manila as a business destination, Entertainment City and the integrated resorts it will host are set to complement existing tourist sites in Manila, such as Intramuros, Corregidor Island and the expected redevelopment of Roxas Boulevard. Alongside these developments, the Department of Tourism’s campaign will highlight activities, as opposed to destinations: this is where the casino and entertainment industry can play significant role.

STEPHEN REILLY: While prominent international players were interested in investing in an integrated resort and casino complex when PAGCOR awarded the first licences in 2008, the public was initially more reluctant. This was primarily due to the decision to have Pasay and not downtown Makati as the designated destination.

However, despite some initial uncertainty regarding the viability of the project, the integrated resort complex has turned out to be a very attractive proposition for visitors. Moreover, with the ongoing construction of the NAIA expressway linking Entertainment City with the airport terminals, Manila is in now in an excellent position to become an international hub.

How can the Philippines boost its visibility as a gaming destination, and what benefits does this generate as compared to other parts of the sector?

REILLY: The integrated resort complex contains both retail and theatre components, which are all interconnected. The concept is simple and reminiscent of a cruise ship, where all components, namely leisure, retail, entertainment and gaming, are all integrated in the same structure, to cater to every member of the family. Indeed, the nature of tourism in the Philippines has experienced dramatic changes in the past two decades.

It was initially difficult to attract visitors due to negative perceptions of the Philippines. Many visitors do not expect the Philippines to offer high standards of entertainment or hospitality, but are pleasantly surprised when they do arrive. Moreover, all the operators will continue to benefit from each other’s operations and the continued entrance of new players, given that international tourists will not go to just one property but instead to an overall destination.

NAGUIAT: Most large international hotel chains are looking at the Philippines to consider investments not only in Entertainment City itself, but also in the surrounding area. Indeed, Entertainment City will develop its own ecosystem to diversify entertainment venues and tourism products for Manila. Within Entertainment City, 9.6 ha will be set aside for a theme park called Nayong Pilipino, which will showcase the diversity of local culture. Moreover, the casino and entertainment complex enables us to complement gaming with theatre and musicals, in this way turning Manila into the Broadway of Asia. The operator, Resorts World, is looking at a seating capacity of 4000 for its theatre while Solaire has a 1700-seat theatre undergoing expansion.

On a nationwide level, many of the licenses for casino operators that are set to expire soon will be renewed only if investment is increased to around $100m-150m. We have created a frame of reference to encourage other casino operators to adhere to higher standards and guidelines, so they can replicate the model of Entertainment City and develop their own sites.

How can investment in hotel infrastructure complement growth in tourist arrivals while at the same time ensuring the quality of new players?

NAGUIAT: Entertainment City comprises a major part of the goal of the Department of Tourism to attract 10m visitors by 2016, as it will provide the necessary boost in room numbers. From the moment we stated the Terms of Reference, we stipulated that operators could increase their gaming areas based on the number of hotel rooms they would add. To increase gaming area, they would have to develop more hotel rooms or retail opportunities. After all, gaming is not our primary focus and only makes up 7.5% of the total Entertainment City complex. Large hotel chains are looking at the Philippines for luxury projects, and the four project operators have been successful in enticing many prominent international brands. With all the infrastructure developments taking place in the complex, we will have at least 5000 rooms in five or six industry-standard hotels by the time of completion. Our marketing campaign for the Asian market needs to pace itself with the development of hotel infrastructure, or else we will not be able to cope with the growth in numbers. Further to this, there has been a proliferation of budget hotels, guaranteeing a range of choices for different market segments. This trend is expected to continue, as occupancy rates are very high for all hotels in the country.

REILLY: Hotel rooms have been at close to full capacity. For example, when we first opened, the Marriott had 342 rooms, and was not able to cope with the demands of an integrated resort and casino. As a result, we rushed the construction of the Maxims hotel with 172 rooms and thereafter opened 712 rooms at the Remington hotel. All three properties are currently above occupancy ratios of 90% and engaged in their respective ongoing expansions. The opening of a ballroom at the Marriott and the entrance of other international brands into the integrated developments has opened many opportunities for the meetings, incentives, conferencing and exhibitions (MICE) business, in turn generating opportunities for hotel infrastructure developments to cater to business travellers. Accordingly, Entertainment City should not simply be branded as a large casino complex, as its offerings will also extend to shopping and the MICE segment, all of which will tend to attract more visitors than the casino alone.

What can be done to attract the best human capital to work in the Philippines’ tourism sector?

REILLY: The hospitality workforce in the Philippines has traditionally been characterised by high quality, with talented, English-speaking and well educated employees. In addition to the availability of a talent pool that could be trained quickly, overhead costs are very competitive for the industry, enticing many international players to enter the sector.

Many of the regional tourism players and casino operators have already been capitalising on Filipino labour as part of their hospitality-related ventures due to their reputation for discipline. Due to the construction and expansion of Entertainment City, many of these workers have been absorbed by the domestic hospitality industry. At the same time, finding the volume of labour that is required for an integrated resort complex is very difficult, and so we have also built training camps at the Genting-Star Tourism Academy to build the pipeline for culinary and gaming professionals and feed our own needs. Operators have also partnered with local universities to ensure a supply of qualified workers for high-growth areas within hospitality and to provide them with certifications. Entertainment City will employ between 35,000 and 40,000 people. However, it will also benefit all the supplier communities that provide the supply chain needed to support operations.

Moreover, many of the jobs in an integrated resort do not require a college degree, thereby creating opportunities for unskilled or under-skilled workers to be employed in different functions in Entertainment City.

NAGUIAT: The Philippines currently boasts excellent human resources capacity: most of its staff have served on the front lines in Macau and Singapore, and received excellent training and are now returning home, given the rapid growth of the domestic hospitality industry. Entertainment City will thus not be a stand-alone project but rather a destination, providing a critical mass for a range of different areas within the hospitality and culinary industry, in addition to supplier industries.